Getting Rich Off The Poor
Many of our readers thought "The Poverty Business" was an unusual topic for BusinessWeek. We used that title on the cover of our May 21 issue for an article that described how a growing number of surprisingly large U.S. companies now see low-income Americans who have bad credit as a ripe source of profits. Why? Advances in risk evaluation, ample liquidity, and the sheer size of America's working-poor population have made selling them everything from cars to computers to financial services a lucrative business—and an important topic for BusinessWeek to probe.
The story sparked scores of responses expressing many clashing views. Some readers agreed with one of our analytical points: The spread of the poverty business, while providing more goods and services to the working poor, has also drawn thousands into debt spirals that can undermine upward mobility. But a large number of those who wrote in had sharp words for the low-income consumers we portrayed and the dubious decisions many had made to take on debt. "All of the people in this story made poor choices. Poor choices should have consequences," wrote one reader. BusinessWeek came in for criticism from some who felt we didn't stress clearly enough a basic pillar of American society: personal responsibility. We also heard from readers outraged that most of the working-poor people we portrayed had three or more children, compounding their financial burdens.
On these latter points, it's worth noting that we reported as meticulously on the foibles of the working poor as we did on the marketing techniques of companies in the poverty business. Both aspects of the story deserve attention.
Here are edited excerpts:
I've been a regular BusinessWeek reader for years, and your cover article "The Poverty Business" left me depressed. Our country cannot be proud when we allow unscrupulous buzzards to pick crumbs from the plates of the less sophisticated and unfortunate in our society. I was particularly bothered by George Mason University economist Tyler Cowen's observation that "the only feasible way to run a capitalist society is to allow companies to maximize their profits" and that sometimes people will be made worse off. To the contrary, we attempt to control man's less-than-noble instincts. It appears that a lot more work is needed to rein in the predators and give the less fortunate a fighting chance—rather than kicking them while they're down.
David M. Hickman
Contrary to what's implied by the tone of your article, our used-car customers know every detail of their financing arrangements. They view a video that explains details about the closing, and then each of those points is explained again during the closing. To ensure customer comprehension, the J.D. Byrider closing process is very structured, and it must be followed exactly. With the customer's consent, it's even videotaped.
Roxanne Tsosie, a consumer in Albuquerque, told you she was unaware of the terms of her contract. However, the record of her transaction confirms that she was told what the payment was and how often it was due.
This forthright approach is one reason why our customer satisfaction rating is 95% positive, and why a large number of the 5,000 people who buy from us every month are either returning customers or referrals. The government doesn't and can't provide transportation to every high-risk customer who wants to work—we're their best option.
We told your reporter that it doesn't benefit us to have cars returned and contracts canceled. That's why we're so careful to provide customers with cars they can afford, and equally careful to explain what their payments will be.
Steven E. Wedding
Chief Financial Officer,
President of Franchising
J.D. Byrider Systems Inc.
Scary stuff. The financially astute look at those of us who aren't as nothing more than prey.
Screen name*: Bobbin
Your article did a good job of showing the problem from both sides. I do think you missed the main problem. That is the age-old question of "are you irresponsible because you are poor or are you poor because you are irresponsible?" I believe it is the latter, and this irresponsibility comes with a price when dealing with credit. The choice is a higher interest rate or no transaction.
I have a good job that pays a good wage. As I'm writing this, I'm sleeping in an office at work because I know at the end of the month I'll be short and need the $20 to $40 of gas money to make ends meet. I've been beaten down over the last few years by excess fees to the working homeless/poor. The American caste system is certainly getting stronger.
Screen name: Tim K
Would it be better for the poor if banks refused to lend to them? Of course not! Increased lending to low-income and/or high-credit-risk individuals is likely a major reason why the rate of homeownership has increased as of late.
Screen name: Whit Stevens
This story is an incredible piece of reporting. It captures a reality that millions of people experience every day but that hardly ever cracks the mainstream media. This is a truly great piece of work. Wouldn't it be great if we lived in a country where most people learned about this kind of real problem, instead of focusing on the foibles of the Paris Hiltons and Lindsay Lohans and their ilk?
Screen name: Paul B
Sorry, but I'm not sympathetic. All of the people in this story made poor choices. Poor choices should have consequences. If you're stupid, you're stupid. And if you're stupid, you're fodder for life's predators.
Screen name: Robert
The easiest way to ensure a life of poverty and debt is to start by having kids when you're under 20 and have no stable partner and no education. It's incredibly hard to beat that combination—so why aren't we letting our middle school kids know?
Screen name: Robbie
Congratulations for taking on the underbelly of modern American capitalism. The article was informative and emotional. The magazine has done its readers a great service.
Screen name: Delphi
If everyone lived within their means, the economy would implode. Remember when you were a kid 50 years ago and being thrifty was a virtue?
Screen name: Tomcat
I enjoyed this article. I was one of these people. I owed $20,000 in high-interest credit card debt and $10,000 in student loans and made only $34,000 a year. I signed on with a consumer credit counseling service, and after five years, I am debt-free and have a credit score of 780. My secret? That's easy. I just said no: No to the new bauble that I really did not need. No to the new car when my old one is doing just fine.
Screen name: Rogelio
* All comments signed by screen names are from BusinessWeek.com